Thursday, June 9, 2011

India, China leave Lagarde guessing

Even without waiting for the West’s candidate for the post of Managing Director of International Monetary Fund, Christine Lagarde, to emplane from Beijing, Xinhua announced the uncertain outcome of her visit. Chinese FM Yang Jiechi told her the race is "open".

On Tuesday, Lagarde got an almost-identical response in Delhi. Most significantly, while reporting China’s stance today, Xinhua took note of the Indian stance. It does seem Delhi and Beijing are in active consultation on the issue.

Yang explained to western journalists in Beijing in English: "We had a good discussion. She explained to me the purpose of her candidacy. I listened very carefully. It's an open field now. There are quite a few people campaigning. China of course gives serious thought to this very important issue." Just before Yang spoke, MFA spokesman in Beijing repeated China’s stance that choice of a new IMF chief should be based on "openness, transparency and merit, and better represent emerging markets and better reflect changes in the world economic structure". He added, “China hopes relevant parties will make the final decision through democratic consultations.”

Of course, Lagarde pitched hard in Beijing, estimating that if she secures China’s support, it becomes a done deal. What does Lagarde herself make out of this unhappy journey to Delhi and Beijing? She put a brave face and admitted it is up to Beijing to decide whether it supports her bid to lead the IMF. Curiously, she agreed with the Chinese statements that said the selection should be “open, transparent and merit-based”. As for her overall prospects, Lagarde said, "I'm confident. I'm very positive about the meetings that I've had so far. My sense is that it's too early to count the chickens, if I may say."

Even as Lagarde arrived in Beijing, Lagarde tried a charm offensive. The AFP quoted her saying China's share in IMF should be boosted to 6.4 percent. China's voting share in the IMF was increased last year to 6.19 percent from the previous 3.65 percent. But Beijing kept a big picture in view.

Is it absolutely crucial Lagarde secures China’s backing? No, even without it, she can get the job. But the issue is of legitimacy. China’s backing legitimises her election. Lagarde’s chances of winning are even because even at this point, with just a day ahead of the key deadline on Friday, the emerging-market nations have failed to coalesce around a consensus candidate. The nomination process closes Friday. Two candidates are officially on the field at this point aside Lagarde: Mexican Central Bank Governor Agustin Carstens, and Kazakhstan National Bank Chairman Grigory Marchenko.

A consensus candidate of the emerging economies has to be Carstens. His candidacy will put the United States in a fix. Carsten arrives in Delhi Friday.

1 comment:

Johan said...

Something doesn’t mesh in this whole picture.

Isn’t the IMF (along with the World Bank) an imperialist creation: a favourite tool for, too paraphrase von Clausewitz, colonisation by other means?

What is the relevance of appointing its chief clerk to anything of substance? Why the noise?